1
EXHIBIT 10.16
MANAGEMENT CONSULTING AGREEMENT
THIS AGREEMENT, entered into as of the 5th day of December, 1997, by
and between Saliva Diagnostic Systems, Inc., a Delaware corporation (the
"Company"), and International Business Consultants, a Jersey corporation
("IBCO") (collectively, "the parties").
WHEREAS, IBCO has heretofore provided the services of ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇ (the "Executive") as the Company's President and Chief Executive
Officer, and the Executive is experienced in and has contributed to all phases
of the business of the Company, and the Company desires to retain IBCO to
provide the services of the Executive on the terms set forth herein;
WHEREAS, the Board of Directors of the Company (the "Board")
recognizes that it is essential and in the best interest of the Company and its
stockholders to ensure the continued dedication and efforts of IBCO to provide
the services of the Executive by offering security in the relationship and
severance and other benefits; and
WHEREAS, in order to induce IBCO to continue to provide the services
of the Executive, the Company desires by this writing to set forth the continued
relationship of IBCO and the Company.
NOW, THEREFORE, in consideration of the respective agreements of the
parties contained herein, it is agreed as follows:
1. Term. The initial term of services under this Agreement shall be
for the period commencing on the date hereof, and ending December 31, 1998;
provided, however, that the terms of this Agreement shall be automatically
extended for one (1) year on January 1, 1999 and on each year thereafter unless
either the Company or IBCO shall have given written notice to the other at least
ninety (90) days prior thereto to the effect that the term of this Agreement
shall not be so extended; and provided, further, that notwithstanding any such
notice by the Company not to extend, the term of this Agreement shall not expire
prior to the expiration of the third anniversary of a Change in Control (as
hereinafter defined).
2. Services. IBCO shall provide the services of an individual
acceptable to the Company as the President and Chief Executive Officer of the
Company and/or in such other senior executive capacity as may be mutually agreed
to in writing by the parties. IBCO has designated ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ to act in
such capacity, and the term "Executive" as used in this Agreement shall refer to
▇▇. ▇▇▇▇▇▇▇▇▇.
(a) The Executive shall report to the Board and shall perform the
duties, undertake the responsibilities and exercise the authority customarily
performed, undertaken and exercised by persons situated in a similar executive
capacity and as are, from time to time, prescribed by the Board. The Executive
shall also promote, by entertainment or otherwise, the business of the Company.
2
(b) IBCO agrees that the Executive shall devote reasonable
attention and time during usual business hours to the business and affairs of
the Company to the extent necessary to discharge the responsibilities assigned
to the Executive hereunder. The Executive may participate in other business or
personal ventures or activities including, but not limited to, (i) serving on
corporate, civil or charitable boards or committees, (ii) managing personal
investments and (iii) delivering lectures and teaching at educational
institutions, so long as such activities are not inconsistent with and do not
significantly interfere with the performance of the Executive's responsibilities
hereunder.
(c) The Company agrees to nominate the Executive for election to
the Board at each annual meeting of shareholders during the terms of Agreement.
IBCO agrees that the Executive shall serve on the Board if elected.
3. Base Salary. The Company agrees to pay or cause to be paid to IBCO
during the term of this Agreement a base salary at the rate of $180,000 per
annum or such greater amount as the Board may from time to time determine
(hereinafter referred to as the "Base Salary"). Such Base Salary shall be
payable to IBCO in semi-monthly installments, commencing on January 1, 1998, as
compensation for its services during the term during which it renders services
hereunder. Such rate of salary, or increased rate of salary, if any, as the case
may be, shall be reviewed at least annually by the Board and may be further
increased (but not decreased) in such amounts as the Board in its discretion may
decide.
4. Stock Options. Upon entering into this Agreement, IBCO shall be
granted options to purchase up to 250,000 shares of common stock of the Company,
par value $.01 per share, pursuant to and on the terms set forth in the Form of
Stock Option Agreement attached hereto as Exhibit A.
5. Bonus.
(a) As compensation for IBCO's previous service to and efforts on
behalf of the Company, IBCO shall be granted options to purchase up to 750,000
shares of common stock of the Company, par value $.01 per share, pursuant to and
on the terms set forth in the Form of Stock Option Agreement attached hereto as
Exhibit A (together with the options described in Section 4, the "Options").
(b) IBCO shall receive an annual incentive bonus (the "Incentive
Bonus") for each of the Company's fiscal years during the term during which IBCO
renders services hereunder, commencing with the fiscal year ending December 31,
1998, in an amount equal to ten percent (10%) of the net income of the Company
for such fiscal year in excess of the amount determined by multiplying
stockholders equity for such fiscal year (determined by averaging the four
quarterly stockholders equity figures reported by the Company for that fiscal
year) by 0.20. The Incentive Bonus shall be payable on the January 30 following
the end of the applicable fiscal year. Notwithstanding the foregoing, IBCO shall
not be entitled to receive the Incentive Bonus if
2
3
its services are terminated for Cause (as defined in Section 9 hereof) during
the applicable fiscal year.
(c) Any Incentive Bonus payable pursuant to this Section 5 shall
be payable in cash or, at the option of the Company, in whole or in part in
shares of the Company's common stock, par value $.01 per share, subject to the
following:
(i) all such shares shall be "restricted securities"
within the meaning of the Securities Act of 1933, as amended, and shall bear a
restrictive legend to that effect; and
(ii) for the purpose of calculating the number of shares
to be issued, the Company's common stock shall be valued at the average of the
closing bids on the five trading days subsequent to the date of the end of the
Company's fiscal year, as reported by The Nasdaq Stock Market.
6. Expenses. IBCO shall be entitled to receive prompt reimbursement
of all expenses reasonably incurred by the Executive in connection with the
performance of his duties hereunder or for promoting, pursuing or otherwise
furthering the business or interests of the Company.
7. Termination. IBCO's services hereunder may be terminated under the
following circumstances:
(a) Disability. The Company may terminate IBCO's services after
having established the Executive's Disability. For purposes of this Agreement,
"Disability" means a physical or mental infirmity which impairs the Executive's
ability to substantially perform his duties under this Agreement which continues
for a period of at least 12 consecutive months. A determination of Disability
shall be made by a physician satisfactory to both IBCO and the Company, which
physician's determination as to Disability shall be made within 10 days of the
request therefor and shall be binding on all parties; provided, however, that if
IBCO and the Company do not agree on a physician, IBCO and the Company shall
each select a physician and these two together shall select a third physician,
which third physician's determination as to Disability shall be binding on all
parties. IBCO shall be entitled to the compensation and benefits provided for
under this Agreement for any period during the term of this Agreement and prior
to the establishment of the Executive's Disability during which the Executive is
unable to work due to a physical or mental infirmity. Notwithstanding anything
contained in this Agreement to the contrary, until the Termination Date
specified in a Notice of Termination (as each term is hereinafter defined)
relating to the Executive's Disability, IBCO shall be entitled to return the
Executive to his position with the Company as set forth in this Agreement in
which event no Disability of the Executive will be deemed to have occurred.
(b) Cause. The Company may terminate IBCO's services for "Cause."
A termination for Cause is a termination evidenced by a resolution adopted in
good faith by two-thirds (2/3) of the Board that the Executive (i) willfully and
continually failed to substantially
3
4
perform his duties with the Company (other than a failure resulting from the
Executive's incapacity due to physical or mental illness or from the Executive's
assignment of duties that would constitute "Good Reason" as hereinafter defined)
which failure continued for a period of at least thirty (30) days after a
written notice of demand for substantial performance has been delivered to IBCO
specifying the manner in which the Executive has failed to substantially
perform, or (ii) willfully engaged in conduct which is demonstrably and
materially injurious to the Company, monetarily or otherwise; provided, however
that no termination of IBCO's services shall be for Cause as set forth in clause
(ii) above until (x) there shall have been delivered to IBCO a copy of a written
notice setting forth that the Executive was guilty of the conduct set forth in
clause (ii) and specifying the particulars thereof in detail, and (y) IBCO shall
have been provided an opportunity to be heard by the Board (with the assistance
of counsel if IBCO so desires). No act, nor failure to act, on the Executive's
part, shall be considered "willful" unless he has acted or failed to act with an
absence of good faith and without a reasonable belief that his action or failure
to act was in the best interest of the Company. Notwithstanding anything
contained in this Agreement to the contrary, no failure to perform by IBCO after
Notice of Termination is given by IBCO shall constitute Cause for purposes of
this Agreement.
(c) (1) Good Reason. IBCO may terminate its services for "Good
Reason." For purposes of this Agreement, Good Reason shall mean the occurrence
after a Change in Control (as hereinafter defined) of any of the events or
conditions described in Subsections (i) through (ix) hereof:
(i) a change in the Executive's status, title, position
or responsibilities (including reporting responsibilities) which, in
IBCO's reasonable judgment, does not represent a promotion from the
Executive's status, title, position or responsibilities as in effect
immediately prior thereto; the assignment to the Executive of any
duties or responsibilities which, in IBCO's reasonable judgment, are
inconsistent with such status, title, position or responsibilities;
or any removal of the Executive from or failure to reappoint or
reelect him to any of such positions, except in connection with the
termination IBCO's services for the Executive's Disability, Cause, as
a result of the Executive's death or by IBCO other than for Good
Reason;
(ii) a reduction in the Base Salary or any failure to pay
IBCO any compensation or benefits to which it is entitled within five
(5) days of the date due;
(iii) a failure by the Company to increase the Base Salary
at least annually at a percentage of Base Salary no less than the
average percentage increases (other than increases resulting from
the Executive's promotion) granted to IBCO during the three most
recent full years ended prior to a Change in Control (or such lesser
number of full years during which IBCO has provided services);
(iv) the failure by the Company to (A) continue in effect
(without reduction in benefit level and/or reward opportunities) any
material compensation or benefit plan in which IBCO was participating
at the time of the Change
4
5
in Control, or (B) provide IBCO with compensation and benefits at
least equal (in terms of benefit levels and/or reward opportunities)
to those provided for under each applicable plan, program and
practice as in effect immediately prior to the Change in Control (or
as in effect following the Change in Control, if greater);
(v) the insolvency or the filing (by any party,
including the Company) of a petition for bankruptcy of the Company;
(vi) any material breach by the Company of any provision
of this Agreement;
(vii) any purported termination of IBCO's services for
Cause by the Company which does not comply with the terms of this
Section 7; or
(viii) the failure of the Company to obtain an agreement,
satisfactory to IBCO, from any successor or assign of the Company to
assume and agree to perform this Agreement, as contemplated in
Section 12 hereof.
(2) Any event or condition described in this Section 7(c)(i)
through (viii) which occurs prior to a Change in Control but which (i) was at
the request of a third party who has taken steps reasonably calculated to effect
a Change in Control, or (ii) otherwise arose in connection with a Change in
Control, shall constitute Good Reason for purposes of this Agreement
notwithstanding that it occurred prior to a Change in Control.
(3) IBCO's right to terminate its services pursuant to this
Section 7(c) shall not be affected by the Executive's incapacity due to physical
or mental illness.
(d) Voluntary Termination. IBCO may voluntarily terminate its
services hereunder at any time. If IBCO voluntarily terminates its services for
any reason or without reason during the 60-day period which commences on the
date which is six (6) months following the date of a Change in Control, it shall
be referred to as a "Limited Period Termination."
(e) For purposes of this Agreement, a "Change in Control" shall
mean any of the following events:
(1) An acquisition (other than directly from the Company) of
any voting securities of the Company (the "Voting Securities") by any "Person"
(as the term person is used for purposes of Section 13 (d) or 14 (d) of the
Securities Exchange Act of 1934, as amended (the "1934 Act")) immediately after
which such Person has "Beneficial Ownership" (within the meaning of Rule 13d-3
promulgated under the ▇▇▇▇ ▇▇▇) of fifteen percent (15%) or more of the combined
voting power of the Company's then outstanding Voting Securities; provided,
however, in determining whether a Change in Control has occurred, Voting
Securities which are acquired in a "Non-Control Acquisition" (as hereinafter
defined) shall not constitute an acquisition which would cause a Change in
Control. A "Non-Control Acquisition" shall mean an acquisition by (i) an
employee benefit plan (or a trust forming a part thereof) maintained by (x)
5
6
the Company or (y) any corporation or other Person of which a majority of its
voting power or its equity securities or equity interest is owned directly or
indirectly by the Company (a "Subsidiary") , (ii) the Company or any Subsidiary,
or (iii) any Person in connection with a "Non-Control Transaction" (as
hereinafter defined).
(2) The individuals who, as of the date of this Agreement, are
members of the Board (the "Incumbent Board"), cease for any reason to constitute
at least two-thirds of the Board; provided, however, that if the election, or
nomination for election by the Company's stockholders, of any new director was
approved by a vote of at least two-thirds of the Incumbent Board, such new
director shall, for purposes of this Agreement, be considered as a member of the
Incumbent Board; provided further, however, that no individual shall be
considered a member of the Incumbent Board if such individual initially assumed
office as a result of either an actual or threatened "Election Contest" (as
described in Rule 14a-l(i) promulgated under the ▇▇▇▇ ▇▇▇) or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person other
than the Board (a "Proxy Contest") including by reason of any agreement intended
to avoid or settle any Election Contest or Proxy Contest; or
(3) Approval by stockholders of the Company of:
(A) A merger, consolidation or reorganization involving
the Company, unless
(i) the stockholders of the Company, immediately
before such merger, consolidation or reorganization, own, directly or
indirectly immediately following such merger, consolidation or
reorganization, at least sixty-six and two-thirds (66 2/3%) of the
combined voting power of the outstanding voting securities of the
corporation resulting from such merger or consolidation or
reorganization (the "Surviving Corporation") in substantially the
same proportion as their ownership of the Voting Securities
immediately before such merger, consolidation or reorganization,
(ii) the individuals who were members of the
Incumbent Board immediately prior to the execution of the agreement
providing for such merger, consolidation or reorganization
constitute at least two-thirds of the members of the board of
directors of the Surviving corporation,
(iii) no Person (other than the company or any
subsidiary), any employee benefit plan (or any trust forming a part
thereof) maintained by the Company, the surviving corporation or any
Subsidiary, or any Person who, immediately prior to such merger,
consolidation or reorganization had Beneficial Ownership of fifteen
percent (15%) or more of the then outstanding Voting Securities, has
Beneficial ownership of fifteen percent (15%) or more of the combined
voting power of the Surviving Corporation's then outstanding voting
securities, and
6
7
(iv) a transaction described in clauses (i) through
(iii) shall herein be referred to as a "Non-Control Transaction";
(B) A complete liquidation or dissolution of the Company;
or
(C) An agreement for the sale or other disposition of all
or substantially all of the assets of the Company to any Person
(other than a transfer to a Subsidiary).
Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
solely because any Person (the "Subject Person") acquired Beneficial Ownership
of more than the permitted amount of the outstanding Voting Securities as a
result of the acquisition of Voting Securities by the Company which, by reducing
the number of Voting Securities outstanding, increases the proportional number
of shares Beneficially owned by the Subject Person, provided that if a Change in
Control would occur (but for the operation of this sentence) as a result of the
acquisition of Voting Securities by the Company, and after such share
acquisition by the Company, the Subject Person becomes the Beneficial Owner of
any additional Voting Securities which increases the percentage of the then
outstanding Voting Securities Beneficially Owned by the Subject Person, then a
Change in Control shall occur.
(4) Notwithstanding anything contained in this Agreement to
the contrary, if IBCO's services are terminated during the term of this
Agreement and IBCO reasonably demonstrates that such termination (i) was at the
request of a third party who has indicated an intention or taken steps
reasonably calculated to effect a Change in Control and who effectuates a Change
in Control (a "Third Party") or (ii) otherwise occurred in connection with, or
in anticipation of, a Change in Control which actually occurs, then for all
purposes of this Agreement, the date of a Change in Control with respect to IBCO
shall mean the date immediately prior to the date of such termination.
(f) Notice of Termination. Any purported termination by the
Company or by IBCO shall be communicated by written Notice of Termination to the
other. For purposes of this Agreement, a "Notice of Termination" shall mean a
notice which indicates the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of IBCO's services under the
provision so indicated. For purposes of this Agreement, no purported termination
of services shall be effective without such Notice of Termination.
(g) Termination Date, Etc. "Termination Date" shall mean in the
case of the Executive's death, his date of death or in all other cases, the date
specified in the Notice of Termination, subject to the following:
(1) If IBCO's services are terminated by the Company for
Cause or due to the Executive's Disability, the date specified in the Notice of
Termination shall be at least thirty (30) days from the date the Notice of
Termination is given to IBCO, provided that, in the
7
8
case of Disability, the Executive shall not have returned to the full-time
performance of his duties during such period of at least thirty (30) days; and
(2) If IBCO's services are terminated for Good Reason or as a
Limited Period Termination, the date specified in the Notice of Termination
shall not be more than sixty (60) days from the date the Notice of Termination
is given to the Company.
8. Compensation Upon Termination. Upon termination of IBCO's services
during the term of this Agreement (including any extensions thereof), IBCO shall
be entitled to the following benefits:
(a) If IBCO's services are terminated by the Company for Cause or
Disability or by IBCO (other than for Good Reason or a Limited Period
Termination), or by reason of the Executive's death, the Company shall pay IBCO
all amounts earned or accrued hereunder through the Termination Date but not
paid as of the Termination Date, including (i) Base Salary, (ii) reimbursement
for any and all monies advanced or expenses incurred in connection with IBCO's
services for reasonable and necessary expenses incurred by the Executive on
behalf of the Company for the period ending on the Termination Date, (iii) any
bonuses or incentive compensation and (iv) any previous compensation which IBCO
has previously deferred (including any interest earned or credited thereon)
(collectively, "Accrued Compensation"). In addition to the foregoing, if IBCO's
services are terminated by the Company for Disability or by reason of the
Executive's death, the Company shall pay to IBCO (i) an amount equal to the
bonus or incentive award that IBCO would have been entitled to receive in
respect of the fiscal year in which the Termination Date occurs had its services
continued until the end of such fiscal year, calculated as if all performance
targets and goals (if applicable) had been fully met by the Company and by IBCO,
as applicable, for such year multiplied by a fraction the numerator of which is
the number of days in such fiscal year through the Termination Date and the
denominator of which is 365 (a "Pro Rata Bonus") plus (ii) a severance payment
equal to the Base Salary at the rate in effect immediately prior to the
termination of IBCO's services. IBCO's entitlement to any other compensation or
benefits shall be determined in accordance with the Company's applicable
programs and practices then in effect.
(b) If IBCO's services shall be terminated (1) by the Company
other than for Cause, death or Disability, (2) by IBCO for Good Reason, or (3)
by IBCO as a Limited Period Termination, then IBCO shall be entitled to the
benefits provided below:
(i) the Company shall pay IBCO all Accrued Compensation
and a Pro Rata Bonus;
(ii) the Company shall pay IBCO as severance pay and in
lieu of any further salary for periods subsequent to the Termination
Date, in a single payment an amount in cash equal to three (3) times
the sum of (A) the Base Salary at the highest rate in effect at any
time within the ninety (90) day period ending on the date the Notice
of Termination is given (or if IBCO's services are terminated after a
Change in Control, the Base Salary immediately prior to the Change in
Control, if greater) and (B) the "Bonus
8
9
Amount." The term "Bonus Amount" shall mean (x) the greatest amount
of any cash bonus or incentive compensation received by IBCO during
the three fiscal years immediately preceding the Termination Date or
(y) if no such bonus was received by IBCO during any of such three
years, then an amount equal to IBCO's maximum bonus which could be
awarded for the fiscal year in which the Termination Date occurs had
IBCO's services continued until the end of such fiscal year;
(iii) (A) all restrictions on any outstanding award
(including restricted stock awards) granted to IBCO shall lapse and
such awards shall become fully (100%) vested immediately and (B) IBCO
shall have the right to require the Company to purchase, for cash,
any shares of unrestricted stock or shares purchased upon the
exercise of any options, at a price equal to the fair market value of
such shares on the date of purchase by the Company.
(c) The amounts provided for in Sections 8(a) and 8(b)(i) and (ii)
shall be paid within five (5) days after the Termination Date.
9. Excise Tax Payments
(a) In the event that any payment or benefit (within the meaning
of Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended (the
"Code")), to IBCO or for its benefit paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise in connection
with, or arising out of, its services to the Company or a change in ownership or
effective control of the Company or of a substantial portion of its assets (a
"Payment" or "Payments"), would be subject to the excise tax imposed by Section
4999 of the Code or any interest or penalties incurred by IBCO with respect to
such excise tax (such excise tax, together with any such interest and penalties,
are hereinafter collectively referred to as the "Excise Tax"), then IBCO will be
entitled to receive an additional payment (a "Gross-Up Payment") in an amount
such that after payment by IBCO of all taxes (including any interest or
penalties, other than interest and penalties imposed by reason of IBCO's failure
to file timely a tax return or pay taxes shown due on its return, imposed with
respect to such taxes and the Excise Tax), including any Excise Tax imposed upon
the Gross-Up Payment, IBCO retains an amount of the Gross-Up Payment equal to
the Excise Tax imposed upon the Payments.
(b) An initial determination as to whether a Gross-Up Payment is
required pursuant to this Agreement and the amount of such Gross-Up Payment
shall be made at the Company's expense by an accounting firm selected by the
Company and reasonably acceptable to IBCO which is designated as one of the five
largest accounting firms in the United States (the "Accounting Firm"). The
Accounting Firm shall provide its determination (the "Determination"), together
with detailed supporting calculations and documentation to the Company and IBCO
within five days of the Termination Date, if applicable, or such other time as
requested by the Company or by IBCO (provided IBCO reasonably believes that any
of the Payments may be subject to the Excise Tax) and if the Accounting Firm
determines that no Excise Tax is payable by IBCO with respect to a Payment or
Payments, it shall furnish IBCO with an opinion reasonably acceptable to IBCO
that no Excise Tax will be imposed with respect
9
10
to any such Payment or Payments. Within ten days of the delivery of the
Determination to IBCO, IBCO shall have the right to dispute the Determination
(the "Dispute"). The Gross-Up Payment, if any, as determined pursuant to this
Section 9(b) shall be paid by the Company to IBCO within five days of the
receipt of the Accounting Firm's determination. The existence of the Dispute
shall not in any way affect IBCO's right to receive the Gross-Up Payment in
accordance with the Determination. If there is no Dispute, the Determination
shall be binding, final and conclusive upon the Company and IBCO subject to the
application of Paragraph 9(c) below.
(c) As a result of the uncertainty in the application of Sections
4999 and 280G of the Code, it is possible that a Gross-Up Payment (or a portion
thereof) will be paid which should not have been paid (an "Excess Payment") or a
Gross-Up Payment (or a portion thereof) which should have been paid will not
have been paid (an "Underpayment"). An Underpayment shall be deemed to have
occurred (i) upon notice (formal or informal) to IBCO from any governmental
taxing authority that IBCO's tax liability (whether in respect of IBCO's current
taxable year or in respect of any prior taxable year) may be increased by reason
of the imposition of the Excise Tax on a Payment or Payments with respect to
which the Company has failed to make a sufficient Gross-Up Payment, (ii) upon a
determination by a court, (iii) by reason of determination by the Company (which
shall include the position taken by the Company, together with its consolidated
group, on its federal income tax return) or (iv) upon the resolution of the
Dispute to IBCO's satisfaction. If an Underpayment occurs, IBCO shall promptly
notify the Company and the Company shall promptly, but in any event, at least
five days prior to the date on which the applicable government taxing authority
has requested payment, pay to IBCO an additional Gross-Up Payment equal to the
amount of the Underpayment plus any interest and penalties (other than interest
and penalties imposed by reason of IBCO's failure to file timely a tax return or
pay taxes shown due on IBCO's return) imposed on the Underpayment. An Excess
Payment shall be deemed to have occurred upon a "Final Determination" (as
hereinafter defined) that the Excise Tax shall not be imposed upon a Payment or
Payments (or portion thereof) with respect to which IBCO had previously received
a Gross-Up Payment. A "Final Determination" shall be deemed to have occurred
when IBCO has received from the applicable government taxing authority a refund
of taxes or other reduction in IBCO's tax liability by reason of the Excise
Payment and upon either (x) the date a determination is made by, or an agreement
is entered into with, the applicable governmental taxing authority which finally
and conclusively binds IBCO and such taxing authority, or in the event that a
claim is brought before a court of competent jurisdiction, the date upon which a
final determination has been made by such court and either all appeals have been
taken and finally resolved or the time for all appeals has expired or (y) the
statute of limitations with respect to IBCO's applicable tax return has expired.
If an Excess Payment is determined to have been made, the amount of the Excess
Payment shall be treated as a loan by the Company to IBCO and IBCO shall pay to
the Company on demand (but not less than 10 days after the determination of such
Excess Payment and written notice has been delivered to the Executive) the
amount of the Excess Payment plus interest at an annual rate equal to the
Applicable Federal Rate provided for in Section 1274(d) of the Code from the
date the Gross-Up Payment (to which the Excess Payment relates) was paid to IBCO
until the date of repayment to the Company.
10
11
(d) Notwithstanding anything contained in this Agreement to the
contrary, in the event that, according to the Determination, an Excise Tax will
be imposed on any Payment or Payments, the Company shall pay to the applicable
government taxing authorities as Excise Tax withholding, the amount of the
Excise Tax that the Company has actually withheld from the Payment or Payments.
10. Unauthorized Disclosure. IBCO shall not make, and shall take
appropriate steps to ensure that the Executive not make, any Unauthorized
Disclosure. For purposes of this Agreement, "Unauthorized Disclosure" shall mean
disclosure by IBCO or by the Executive without the consent of the Board to any
person, other than an employee of the Company or a person to whom disclosure is
reasonably necessary or appropriate in connection with the performance by the
Executive of his duties as an executive of the Company or as may be legally
required, of any confidential information obtained by IBCO or the Executive
while providing services to the Company (including, but not limited to, any
confidential information with respect to any of the Company's customers or
methods of distribution) the disclosure of which it or he knows or has reason to
believe will be materially injurious to the Company; provided, however, that
such term shall not include the use or disclosure by IBCO or the Executive,
without consent, of any information known generally to the public (other than as
a result of disclosure by him in violation of this Section 10) or any
information not otherwise considered confidential by a reasonable person engaged
in the same business as that conducted by the Company. Upon termination of
IBCO's services, IBCO and the Executive shall return to the Company all such
information which exists in writer on other physical form in its or his
possession or under its control, and shall take appropriate steps to ensure that
the Executive returns such information.
11. Unique Services. IBCO recognizes that the Executive's services
hereunder are of a special and peculiar value, the loss of which cannot be
adequately compensated for in damages, and in the event of a breach of this
Agreement by IBCO, the Company shall be entitled to equitable relief by way of
injunction, in addition to any other legal and equitable remedies.
12. Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of IBCO and the Company, and their respective
successors and its assigns. IBCO and the Company shall require any successor or
assign to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that IBCO and the Company would be required to
perform it if no such succession or assignment had taken place. The terms "IBCO"
and "the Company" as used in this Agreement shall include such respective
successors and assigns. The term "successors and assigns" as used herein shall
exclusively mean a corporation or other entity acquiring all or substantially
all the assets and business of IBCO or the Company, as applicable (including
this Agreement), whether by operation of law or otherwise.
13. Fees and Expenses. The Company shall pay all legal fees and
related expenses (including the costs of experts, evidence and counsel) incurred
by IBCO as they become due as a result of (i) the termination of IBCO's services
(including all such fees and expenses, if any, incurred in contesting or
disputing any such termination), (ii) IBCO's hearing before the Board as
contemplated in Section 7(b) of this Agreement, or (iii) IBCO's seeking to
obtain or enforce any right or benefit provided by this Agreement (including,
without limitation, any such fees and
11
12
expenses incurred in connection with (x) the Dispute and (y) the Gross-Up
Payment, whether as a result of any applicable government taxing authority,
proceeding, audit or otherwise) or by any other plan or arrangement maintained
by the Company under which IBCO is or may be entitled to receive benefits.
14. Notice. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement (including the Notice of
Termination) shall be in writing and shall be deemed to have been duly given
when personally delivered or sent by certified mail, return receipt requested,
postage prepaid, addressed to the respective addresses last given by each party
to the other, provided that all notices to the Company shall be directed to the
attention of the Board with a copy to the Company. All notices and
communications shall be deemed to have been received on the date of delivery
thereof or on the third business day after the mailing thereof, except that
notice of change of address shall be effective only upon receipt.
15. Non-exclusivity of Rights. Nothing in this Agreement shall
prevent or limit IBCO's continuing or future participation in any benefit,
bonus, incentive or other plan or program provided by the Company or any of its
subsidiaries and for which IBCO may qualify, nor shall anything herein limit or
reduce such rights as IBCO may have under any other agreements with the Company
or any of its subsidiaries. Amounts which are vested benefits or which IBCO is
otherwise entitled to receive under any plan or program of the Company or any of
its subsidiaries shall be payable in accordance with such plan or program,
except as explicitly modified by this Agreement.
16. Settlement of Claims. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be circumstances affected by any set-off, counterclaim,
recoupment, defense or other right which the Company may have against IBCO or
others.
17. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by IBCO and the Company. No waiver by either party hereto
at any time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreement or representations,
oral or otherwise, express or implied, with respect to the subject matter hereof
have been made by either party which are not expressly set forth in this
Agreement.
18. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Delaware, without
giving effect to the conflict of law principles thereof.
19. Jurisdiction and Venue. Each of the parties to this Agreement
hereby (i) consents to personal jurisdiction in any suit, claim, action or
proceeding relating to or arising under this Agreement which is brought in any
local or federal court in the State of Delaware, (ii) consents to service of
process upon such party in the manner set forth in Section 14 hereof, and (iii)
12
13
waives any objection such party may have to venue in any such Delaware court or
to any claim that any such Delaware court is an inconvenient forum.
20. Public Announcements. Neither the Company nor IBCO shall make any
public statements, including, without limitation, any press releases, with
respect to this Agreement and the transactions contemplated hereby without the
prior written consent of the other party (which consent may not be unreasonably
withheld), except as may be required by law.
21. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
22. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto and supersedes all prior agreements, if any,
understandings and arrangements, oral or written, between the parties hereto
with respect to the subject matter hereof.
13
14
IN WITNESS WHEREOF, the Company and IBCO have caused this Management
Consulting Agreement to be executed by their respective duly authorized officers
as of the day and year first above written.
SALIVA DIAGNOSTIC SYSTEMS, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Director
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Director
INTERNATIONAL BUSINESS CONSULTANTS
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President